Eliot Caroom/The Star-LedgerThe Rahway Valley Sewerage Authority plant that may now never run in this 2010 Star-Ledger file photo.

RAHWAY — A decade after starting down a path toward waste and embarrassment with a misbegotten power plant project, leaders at the Rahway Valley Sewerage Authority say they’re making progress in getting the agency back on solid fiscal ground.

The authority’s new executive director said he’s found $1 million in annual savings — mostly through staff reductions — that will begin by year’s end.

Meanwhile, commissioners and ratepayers are hoping to recoup more than $30 million the agency said it lost through a blunder-ridden civic project, but are in waiting mode as lawyers try to find an arbitrator to hear their complicated civil case.

When Rahway Valley first started planning to build a cogeneration plant, meant to power the authority’s facilities by burning natural gas and methane generated in sewage processing, it was expected to save the operation some $1.2 million per year.

By the time the plant was finally nearing completion last year, following years of setbacks, an outside auditor had concluded it never made much financial sense and probably would never run. The authority, which processes sewerage for about 300,000 residents of Union and Middlesex counties, now says if the cogen ever did run, it would cost money — not save it.

"It was a boondoggle from the beginning and it never should have happened," said critic John E. McCormac, mayor of Woodbridge, one of 11 municipalities still serviced by the authority.

But now Rahway Valley’s most fervent critics admit they’re seeing progress. Executive Director Jim Meehan, who promised to streamline operations when he was hired last fall, said he’s been able to cut costs by about $800,000 per year. By the end of the calendar year, there will be an additional $200,000 in savings, he said.

"We have reduced our staff and we have chipped away at our operating budget," he said.

Those operating costs account for about half of the agency’s total expenses, around $26.5 million this year. The other half goes toward debt payments.

When Meehan was hired, the staff totaled 60, he said. By the end of the year, it will be reduced to 52 or 53 through a combination of layoffs, attrition and one firing.

"Within eight months we’ve made a lot of changes," Meehan said.

Mayor Sal Bonaccorso of Clark, another participating municipality, said it’s a welcome sign that the authority is moving in the right direction.

"We’re starting to see the light at the end of the tunnel," he said.

But the biggest concern now among interested parties is whether the authority can come out on top with its legal case. Rahway Valley is pointing fingers at more than a dozen companies, essentially every outside agency that advised the commissioners or staff on the plant or were involved in its construction.

Meehan declined to comment on the case because it is pending, offering only that the plant is "done and over with."

"We’re trying to recoup our money legally," he said. "We can’t do anything about the past, we can only change the future."

In March, the authority filed an 89-page demand for arbitration that detailed the finding of auditors. The scathing document holds no punches:

"It has now become apparent that, from it’s very inception, the design and construction of the Facility was plagued with fraud, mismanagement, negligence, breaches of contract, conflicts of interest, and self-dealing with varying degrees on the part of the various respondents."

The authority contends it lost $36 million on the plant. There’s no word on when attorneys for the all the parties will agree to start arbitration hearings.
Staff writer Eliot Caroom contributed to this report.